Internal Candidates

I think it is important that existing staff get opportunities to apply for any new roles you're looking for. This can help you to help them with their career plans, will aid retention, and someone internal will hit a new job with an existing network and familiarity with your organization. Quite aside from all this, a lot of countries have legislation requiring you to provide equal opportunities to internal and external candidates!

As well as your usual interview process, there are a couple of additional things I've found it pays to look into. Firstly, make sure you know why they want the role - it's important to filter out those who might be clutching at the role for progression for progressions sake. Thats not a bad thing to ask external candidates too. You should also check into what the internal applicant's succession plan is for their current role in your organization - sometimes you're no better off just by moving a hole around the company.

You should also be paying attention to any patterns that seem to be emerging. Does it look like a disproportionately large number of people from a certain department, role, or manager are always applying for other things in the company? If so, you might have something unsustainable going on that you should look into.

Ultimately, internal candidates are not always the best candidates, and sometimes the right thing to do is bring in new thinking, but it is important they get a fair chance.

Of Multicultural Offices

Have a look at this interview with Horacio Falcao from INSEAD on cross-cultural negotiation.

I found the points about overestimating and underestimating proximity in relationships particularly interesting - Horacio says that we often make too many assumptions when dealing with people from similar backgrounds and nationalities and this can end up costing us.  When dealing with those we perceive to be obviously different we take extra care to ensure we explicitly state everything up front, a valuable practice we can take foregranted when we strongly relate with the other party from the start.

Tips for Successful Offshoring

Over the last few weeks I've posted about how our offshore shenanigans have worked out and about how sustainable the location is shaping up to be. I thought it'd be worth also putting something out about some of the little operational lessons we learnt along the way...

For many organisations like us, offshoring is no longer about the cheapest delivery or adjusting the capital/labor ratio - it is now about the best quality and retaining capacity (although cost effectives is very much a priority). Companies that are successful at this are winning because they are not treating their offshore resources as cheap disposable assets - they are investing in the people, infrastructure and facilities. The economics involved often means ROI on this is significantly better than the same investment spent at home. Given this change in landscape how do you make sure you're still getting the best out of offshoring?

The first thing to do when considering offshoring is to decide what exactly you are going to offshore. Your options typically fall somewhere between product specialization and disaggregation, or in plain English having an offshore center wholly own the entire production chain (SDLC) vs. providing one or more steps (such as development, testing or support) as a service.

We went down the product specialization route. Setting up our offshore engineering center to be capable of end-to-end delivery for a chosen set of our products via agile/SCRUM was the right decision for us; so not everything here will be relevant to everyone!

Here is what made a difference for us:

1. Set yourself up to be as independent as possible. Even a 2 hour time difference doesn't sound much but when you think about it 9am in the UK is 11am in Romania. You can pretty much lose half a day if you create organizational dependencies in either direction. If there are certain areas you can't achieve total independence in then work one day ahead (plan properly) in the lagging time zone.
2. Invest in good communication. Personal interaction matters, doing frequent visits both ways and using tools like video conferencing to keep relationships alive in between are good. There are also a few easy, obvious things that really make a big difference on a daily basis; like phones that use internal extension numbers and having voicemail and integrated calendars between offices. Sounds simple but you'd be surprised how many people rely solely on email and don't integrate basic planning tools.
3. Collocate whenever possible. When you can't collocate make sure you outline the key events in your SDLC (new project kick offs, sprint planning and demos in agile) to your product guys and get their commitment that they'll turn up, in person, to these as a minimum. Traveling a lot gets costly so if necessary coax them over with company apartments to alleviate their hotel budget woes - it's worth the expense.
4. Get good local advice. An obvious one for professional services like legal and accounting but don't forget about some experience on the ground to help judge cultural impacts and advise on local 'norms' for everything from pay to holidays.
5. Treat the people the same way as you do the rest of the organisation. Obviously there will be differences in areas like employment contracts and other things you might need to do to keep parity with the local market but these are expected in a mature global organisation. As long as everyone has the same opportunities for career development and can participate in all the same company-wide initiatives that will help teams bond internationally.
6. Be prepared to fight head office. If you're responsible for any remote office you'll always be subject various well meaning head office types coming up with great new 'process improvements' for the whole organisation. Great if you can adopt them but if they don't quite suit the local environment it can be a nightmare fending off the unified procedure merchants. When the right thing to do is have something locally tailored you have to have that fight if you want the best results from those teams.
7. Cultural adapting is a 2 way street. A lot of emphasis is put on how the big, bad HQ must come to grips with, and embrace, the unique flavor of a newly acquired territory; but the reality is a blending has to take place. Yes, the greater organisation is absorbing a new culture but that new culture is joining a greater whole and as such needs to expect some changes too.

Clearly there is a whole lot more to it than this but these are the big things we picked up that worked well in our model. Drop me a line if you've picked up something valuable in similar circumstances.

Romanian Trends

A few days ago I posted a summary about how our offshoring adventures have turned out so far and with said posting was a promise to put something up about the recent trends I've seen emerging in Romania.  Let's run through them in no particular order:

Costs

The most immediately visible trend on a monthly basis (and the one people usually ask about first) is how costs are changing.  In the year since we've been there we've seen costs creep up by approximately 14% overall.  The biggest increases have been in rents/leases, utilities, fuel and cost of credit (making existing borrowing more expensive).  Salaries have risen by about 7% and there is probably more adjustment to come as the cost of living has risen well in excess of this.  When you combine these factors with a volatile currency (RON) and a big supply of imported goods and services priced in Euros you've got a upward spiral going on.  Some of this might not line up with what you may read on the internet or in pre-investment reports.  Why might this be?  See the next point...

Public Information

In the UK it is easy to access fairly accurate information about market prices, salaries, accounting and employment laws - you get used to being able to make pretty informed decisions based on reliable data.  Not so in Romania - historical data and public records are notoriously difficult to get hold of, usually paper-based and tend to say what they recorder thought was best.  What you read in authoritative reports is usually a kind of average of what's been discovered - so it isn't that it's unreliable, it's just that it's as reliable as you're going to get.  Another thing to bear in mind is the discrepancy between cities is a lot more significant than in the west so national averages don't really carry much weight in real life.  This is supposed to be about trends and there isn't really a trend here - I guess I included it because there should be a trend toward making more accurate, relevant market information freely available.  People need confidence before investing and facts are a good source of that.

Employment

By now everyone must know what I think about Romanian engineers so let's skip that and talk about the market.  It's been an employers market here for a very long time but the balance of power is gradually shifting to employees.  Between the increased opportunities for working abroad EU membership has brought and the rapidly growing number of companies opening offices in Romania skilled Romanians have a lot more choice in work now than ever before.  This doesn't bother us much as we've got a very unique offering but it does mean having to work harder this year to attract the right talent and I only see this becoming more competitive.

Education

Universities and technical colleges are very good at adapting their curriculum to match what the market demands from graduates, but maybe too good...  They need to strike a balance between the practical (preparing people for employment) and the academic (teaching those fundamental scientific principles and research/problem solving skills).  At the moment more and more education is based on equipping students with immediately usable skills but it seems to be at the expense of the basics like how logical operations work, communications protocols and how machines interpret instructions.  If this keeps going in the direction it's headed it will lead to graduates who can immediately put together a basic system using (for example) rails but will struggle to pick up the next thing, and the next and the next.

Organisation

On the whole Romanians consider working for western companies desirable and are attracted to our values and management philosophy.  From what I have seen traditional Romanian management styles seem to revolve around clock watching and micromanagement - it's a very 'production line' philosophy.  I haven't come across a good management school/academy here and perhaps that's why?  The flipside of this is there is no shortage of people with good leadership potential and we're experiencing a surge of interest in moving into management roles - it seems like once the right culture has been established they are keen to take it on.  We're busy planning how we'll support transitioning people into these roles and if there are any significant lessons in it I'll be sure to post about it.

Bottom Line

In summary we’ve seen prices rise quite considerably in just over a year here and the currency has been quite volatile but where it could really all go wrong for Romania is that while prices have risen there has been no corresponding increase in quality of infrastructure or improvement in central services (i.e. how the government administers/supports businesses etc).  If these things are not carefully planned I think Romania could find itself in a situation where it prices itself out of the reach of that first wave of cost sensitive companies prepared to accept shortcomings in certain areas in order to access such great talent at low cost and at the same time not be providing the stable platform that the next wave of less cost sensitive global expansionists expect before they’ll come into a new economy.  Competition for skilled employees is certainly increasing but my feeling is we've got a few years worth of recruitment tactics yet before having to reassess growth strategies.

Offshoring - What's the Skinny 1 Year On?

A little over a year ago I left the tree lined and centrally-heated comfort of Surrey and ventured boldly forth to set up an offshore development center.  I toured the usual suspects (ah expenses, the last true bastion of the free lunch) and eventually settled on Romania via a journey documented by such worthy scribes as Silicon.com, ComputerWeekly and even myself.  While setup was all very exciting, one thing that doesn't seem to happen very often is a bit of a retrospective - once the dust has settled we should ask ourselves; what has it really been like?  Did it live up to expectations?  Did it work out as planned?  What unexpected challenges did we encounter?

Since such follow up stories never seem to emerge naturally I thought I'd take a few minutes to do a "1 year later debrief" in the time honored Clint Eastwood style.  I hope it's useful data for anyone considering setting up an offshore operation in Eastern Europe - I know I would've liked the benefit of a bit more experience before we got started!  So, Romania, what would Mr Eastwood say?

The Good

The first thing to say is the quality of the engineers over there is outstanding, they have truly exceeded our expectations.  As I've said before we have very complex business problems to solve and they can't be addressed with run-of-the-mill-3-tier-java-tomcat-and-a-DB thinking; we need innovation and a real desire to tackle the fundamentals of a problem - not just contort it to fit ruby on rails or [insert your favorite stack here].  The guys are passionate about technology and keen to get to grips with new patterns and techniques which can be a breath of fresh air when you're used to a more pessimistic, risk averse crowd.

Cost is of course the other major advantage of Eastern Europe.  I'd add that Romania isn't the cheapest place to set up, in practice things ended up costing around a third of our UK benchmark; but what it does have in spades is cost effectiveness when you weigh up what you're getting for that third.  If, like us, you've got reasonably unique requirements then you'll need to retain the domain knowledge as you build it up (avoid the low-cost high-churn models) and you'll want more engaged, creative engineers - you can do worse that here.

In general Romania has a friendly atmosphere, a unique (but hard to find) culture and almost everybody you need to deal with speaks excellent English.  I spend the majority of my time with the team there and really enjoy the buzz in the office - it's an environment conducive to solving tough problems with new technology.

The Bad

The main things I've found frustrating about Romania have largely been administrative.  From the very outset there is little central support for new businesses or companies looking to open offices.  A little light reading would suggest I'm wrong here (there are a lot of schemes publicised, particularly since EU ascension in January 07) but the reality on the ground is a little different - and what is available is inconsistent and [mostly] retrospective.  Another aspect of administration is paperwork and I can tell you, Romania scares a lot of trees!  Many everyday processes (payroll, taxes, registration and even utility bills) are manual and require the ferrying of individual pieces of paper between different buildings all over town to be stamped and signed by different human beings.  Then you get to ferry said paperwork back so the first set of human beings can stamp it again to verify the next set had stamped it after them.  Keeps the admin staff fit at least.

Another small gripe I have is the difficulty in finding reliable suppliers.  This goes for everything from computers to office furniture to shipping.  I haven't come across any of the base dishonesty a lot of those global risk management reports would have you believe is de rigueur, simply a lot of companies so desperate for your business that they make promises they can't keep.  Yes, we guarantee all your desks will be here by Tuesday.  Yes, we can assure you we have those servers in stock.  No, you clearly couldn't and I would much rather have known about it up front.

Finally an issue you wouldn't expect in such an administration-happy country; getting a consistent answer.  This is a such a big issue it even constituted a formal finding in the preparedness for EU membership report, recorded as unifying the interpretation and application of the law and progress here is slow.  For example, when trying to ascertain your obligations with respect to taxes, reporting and employment law there are as many different answers as people you are prepared to ask - and very little in the way of public records and other reference material available online.

The Ugly

There are a number of cultural differences between the UK and Romania and if you're not careful they can bite you.  An example of something we learned the hard way is the approach to public holidays (referred to as free days in Romania).  In the UK we pretty much view said holidays as bonus time off regardless of any historical significance so when a project is running behind and we need to pull some extra hours that's usually OK (as long as we get the time off later!).  Not so in Romania - generalising to the same degree we just did about London; people here tend to be quite religious and do have an attachment to taking the break on the formal occasion rather than some later, arbitrary time that better suits the company schedule.

Another thing that can be tough to get to grips with is the idea that everything is a continuous negotiation.  Initially it's a refreshing challenge - there's quite a lightweight legal framework for the more common operations (like leasing and real estate transactions) and most organizations have very few standard terms (compared to the volumes of contractual nitpicking you're used to wading through) so it means you've got a lot of scope to come to a highly tailored agreement.  Agreement being the key word here; quite often suppliers turn up every couple of months to negotiate new terms to a 2 year deal.  On the upside they do tend to have a sense of fairness (it is not always about gouging you some more) but sometimes you'd rather just have something sorted for 24 months, be able to depend on it and just get on with other things.

Perhaps it's an artifact born of sudden freedom after so many years of zero tolerance and no flexibility but, come on, a deal is a deal.

The Summary [caution: not strictly a Clint metric]

I still stand behind the decision to start our offshore development center in Romania and we'll be here for the long run.  Overall the benefits stacked up much as we predicted and we're getting great results and favorable economics.  It's cold in winter, hot in summer and they put on some excellent women and wine.  It isn't without it's challenges but the tradeoffs are good.  That said, if everything in Romania worked as smoothly as it does in London then it would be London and, well, we could have stayed at home.

I was going to include in this post a rundown of the trends I'm seeing on the ground here and my predictions for the future but it's gone on way too long already (well done if you made it this far).  So for the sake of your eyes and my fingertips I'll post something separate in a couple of days.